A Growing Apple iPad Market Awaits in B-to-B, Education

Mobile marketing is generally built around the need to engage with consumers, but as Apple gains a stronger foothold in enterprise and education, business-to-business marketing opportunities are bubbling to the surface. Driven by its well-known successes in the consumer space with smartphones and tablets, Apple is embracing a natural extension to business channels and education. During its Q2 earnings call, the company revealed how mass-scale adoption rates are beginning to enable a largely untapped segment of marketing and apps.

Apple estimates that the number of iPhones in the Fortune 500 doubled in the past year and the presence of iPads among those companies more than tripled over the same period. It also sold a record number of Macs and iPads to educational institutions, selling twice as many iPads as Macs to schools during the last quarter.

"The adoption rate of iPad in education is something I've never seen from any technology product in history," said Apple CEO Tim Cook. "Usually, education tends to be a fairly conservative institution in terms of buying, or K-12 does, and we're not seeing that at all on the iPad."

Indeed, it's not only schools that are buying iPads; it is Apple's most rapidly adopted product ever. With 84 million iPads sold to date (17 million sold during the last quarter), according to Cook, "It took us more than twice as long to achieve that (number) on iPod and we achieved it in a third less time with the iPhone."

The iPad is a device for the affluent, at least at its current price point, and that makes it a perfect fit for brands that essentially want to reach their peers without all the concerns and limitations of a traditional consumer-facing strategy, said Peggy Anne Salz, founder and chief analyst at mobile research firm MobileGroove. "It's an untapped opportunity for B-to-B marketing."

For Apple, "in addition to owning the space this is coming together at precisely the same time where brands are going to understand the potential of B-to-B marketing… It's almost a perfect storm of variables here," she said. Her latest research for a forthcoming book about mobile marketing has her convinced that B-to-B marketing is an untapped and even vaster opportunity for mobile than business-to-consumer.

Take Patient Shuffle, for example, an iPad game from General Electric Co. that challenges users to run a virtual hospital. Salz recently spoke with GE about the app and learned that with the right mix of B-to-B marketing and entertainment, the company was able to reach doctors and hospital administrators, a large majority of whom already own iPads and iPhone, she said.

"This opens up new opportunities for companies that think, 'we're not consumer facing, this isn't going to work for us,' " Salz added.

Of the nearly 1 million iPads Apple sold in the U.S. education market last quarter, the company highlighted one large-scale purchase at the Mansfield Independent School District in Texas, which bought 11,000 iPads to distribute this coming fall to every Mansfield High School student and teacher under the district's Power Up initiative.

"Some teachers will use a flipped-classroom concept, putting their lessons and resources online where students can access them anytime with their iPads," said Apple CFO Peter Oppenheimer. "As a result, students take responsibility for their own learning and teachers are able to increase their interactions and personalize content."

Oppenheimer also made note of some recent cases of iPad adoption within enterprise. British Airways incorporated thousands of iPads throughout its business for customer support. And homebuilder Dialogue House in Japan is currently building smart homes that will be controlled by iPads, he said.

Apple closed its most recent quarter with a cumulative total of 410 million iOS devices sold to date. Overall, it sold 26 million iPhones, 17 million iPads and 4 million Macs, contributing to $35 billion in revenue and $8.8 billion in net profit. iPhone sales alone accounted for more than 46 percent of all revenue last quarter, or $16.2 billion, and iPad sales jumped 84 percent from the year-ago period.

Despite Apple's envious financial results, it fell short of some Wall Street predictions and is providing a weaker outlook for the current quarter with projected revenue of $34 billion. This has become a seasonal problem for Apple, with rampant speculation and rumors about the widely expected sixth-generation iPhone causing some to hold off on their smartphone purchases for the time being.

"We expect most of this decline to be driven by a fall transition," said Oppenheimer, adding that the company has no plans to announce any new carriers or countries for iPhone distribution in the current quarter. In other words, don't expect the new iPhone to come out until October - at the earliest. "Weekly iPhone sales continue to be impacted by rumors and speculation of new products," he said.

Apple ended the quarter with more than 650,000 apps available on the App Store and 225,000 developed specifically for the iPad. The company has paid $5.5 billion to developers since the App Store first launched.

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ABOUT THE AUTHOR

Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at matt@kapko.co.

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